COVID-19 SUPPLEMENT · Urban 22% Location Type by Number of Guest Rooms BROAD GEOGRAPHIC...
Transcript of COVID-19 SUPPLEMENT · Urban 22% Location Type by Number of Guest Rooms BROAD GEOGRAPHIC...
COVID-19 SUPPLEMENT
J U LY 2 0 2 0 • N Y S E : A P L E
FORWARD - LOOK ING STATEMENTS
Certain statements made in this presentation are forward-looking statements, including statements regarding the impact to Apple Hospitality REIT, Inc.’s
(the “Company,” “Apple Hospitality,” “Apple” or “APLE”) business and financial condition from, and measures being taken in response to, the COVID-
19 situation. These forward-looking statements include statements regarding our intent, belief or current expectations and are based on various
assumptions. These statements involve substantial risks and uncertainties. Actual results or events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements that we make. Forward-looking statements may include, but are not limited to, statements
regarding net asset value and potential trading prices. Words such as “anticipates,” “believes,” “expects,” “estimates,” “projects,” “plans,” “intends,”
“may,” “will,” “would,“ “outlook,” “strategy,” and similar expressions are intended to identify forward-looking statements, although not all forward-
looking statements contain these identifying words. Actual results or outcomes may differ materially from those contemplated by the forward-looking
statement. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or reverse any
forward-looking statement to reflect changed assumptions or the occurrence of unanticipated events or changes to future operating results, unless required
to do so by law. Currently, one of the most significant factors that could cause actual outcomes to differ materially from the Company’s forward-looking
statements is the adverse effect of COVID-19 on the Company’s business, financial performance and condition, operating results and cash flows, the real
estate market and the hospitality industry specifically, and the global economy and financial markets. The significance, extent and duration of the
impacts caused by the COVID-19 outbreak on the Company will depend on future developments, which are highly uncertain and cannot be predicted
with confidence at this time, including the scope, severity and duration of the pandemic, the extent and effectiveness of the actions taken to contain the
pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Such additional
factors that might cause such differences include, but are not limited to, the ability of Apple Hospitality to effectively acquire and dispose of properties;
the ability of Apple Hospitality to successfully integrate recent and pending transactions and implement its operating strategy; changes in general
political, economic and competitive conditions and specific market conditions; reduced business and leisure travel due to travel-related health concerns,
including the widespread outbreak of infectious or contagious diseases in the U.S. such as COVID-19; adverse changes in the real estate and real estate
capital markets; financing risks; litigation risks; regulatory proceedings or inquiries; changes in laws or regulations or interpretations of current laws and
regulations that impact Apple Hospitality’s business, assets or classification as a real estate investment trust; or other risks detailed in filings made by
Apple Hospitality with the Securities and Exchange Commission (“SEC”). Although Apple Hospitality believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that
such statements included in this presentation will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as a representation by Apple Hospitality or any other person that the results or
conditions described in such statements or the objectives and plans of Apple Hospitality will be achieved.
Cover photo: Courtyard, Carolina Beach, NC 2
Note: Hotel portfolio statistics as of May 15, 2020. Market categorization based on STR designation. Average Effective Age represents years since hotels were built or last renovated. 3
COMPANY PROFILE
233H O T E L S
29,759G U E S T R O O M S
34S T A T E S
87M A R K E T S
12B R A N D S
99%R O O M S - F O C U S E D
4 years A V E R A G E E F F E C T I V E A G E
Courtyard, Virginia Beach, VA
E F F O R T S T O P R E S E R V E C A P I TA L & M I T I G AT E I M PA C T O F C O V I D - 1 9
4Hampton Inn & Suites, Atlanta, GA
• Quickly worked with management companies to make swift
operational changes to staffing & service models
• Consolidated operations in markets where the Company owns
multiple properties to maximize operational efficiencies
• Utilized energy management systems to minimize utility usage on
unused floors
• Reduced/eliminated operational costs
o Adjusted food & beverage offerings
o Reduced amenities
o Eliminated daily cleaning of occupied guest rooms during
guest stays
o Reduced various hotel service contracts
• Enhanced sales strategy with focus on sectors that may have
lodging needs in current environment
• Corporate measures –
o All non-essential capital improvement projects for 2020
postponed
o Monthly distributions suspended
o Entered into amendments to credit facilities to provide
covenant waivers through June 30, 2021
o Compensation reductions for Executive Chairman, CEO
and non-employee directors
o Terminated written trading plan under Share Repurchase
Program
o Contract for the purchase of a Courtyard by Marriott to be
constructed in Denver, CO for $49 million was terminated
and $0.6 million deposit was refunded
Airport 7%
Interstate 2%
Resort 5%
Small Metro 6%
Suburban 58%
Urban 22%
Location Type by
Number of Guest Rooms
BROAD GEOGRAPH IC D IVERS I F ICAT ION
40%
26%
Occupancy
$102
$109
ADR
$41
$29
RevPAR
Trailing 28 Days Suburban vs. Urban(1)
Suburban Urban
Note: Hotel portfolio statistics as of May 15, 2020. Location and market categorization based on STR designation.
(1) Trailing 28 days data as of June 27, 2020 provided by STR for the Company’s hotels owned as of May 15, 2020, including all rooms available for consolidated hotels, and may differ from
actual results achieved.
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Note: Hotel portfolio statistics as of May 15, 2020.
(1) Brand Type based on number of guest rooms. Extended Stay includes Residence Inn by Marriott, TownePlace Suites by Marriott, Home2 Suites by Hilton and Homewood Suites by Hilton.
Suite Product includes Fairfield Inn & Suites by Marriott, SpringHill Suites by Marriott, Embassy Suites by Hilton and Hampton Inn & Suites by Hilton. Other Select Service includes Hampton
Inn by Hilton, Hilton Garden Inn, Courtyard by Marriott, Fairfield Inn by Marriott, Hyatt Place and independent boutique hotels. Full Service includes Marriott.
14%
86%
0% 50% 100%
Group
Transient
ROOMS - FOCUSED S TRATEGY
Brand Type(1)
% of APLE
Portfolio
Extended Stay 33%
Suite Product 23%
Other Select Service 42%
Full Service 2%
2019 Rooms Sold Segmentation
77%
67%
76%
41%
18%
29%
33%
36%
40%
43%
Week ended
OCCUPANCY L EVE LS BE FORE & DUR ING COV ID -19
Source: Weekly data provided by STR for the Company’s hotels owned as of May 15, 2020, including all rooms available for consolidated hotels, and may differ from actual results achieved.
Began to see impact from COVID-19 in March and
occupancy appears to have bottomed out in mid-April
Courtyard and Residence Inn, Richmond, VA
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11%
14%
16%
21%
27%
52%
12%
11%
16%
15%
20%
21%
5%
37%
39%
37%
41%
35%
21%
70%
1%
10%
40%
36%
31%
23%
18%
6%
25%
99%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
6/27/2020
6/20/2020
6/13/2020
6/6/2020
May 2020
April 2020
March 2020
February 2020
January 2020
2019
0% - 15% 15% - 25% 25% - 50% 50% +
% OF HOTE LS BY OCCUPANCY T I E R
Week ended
Occupancy Tier
Source: Data provided by STR for hotels owned by the Company for the periods noted, including all rooms available for consolidated hotels, and may differ from actual results achieved.
(1) Consolidated hotels included in 0% - 15% occupancy tier.
(1)
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L IQU ID I TY POS I T ION
($ in millions)
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Debt Summary as of March 31, 2020(1)
($ in thousands)
Mortgages (31 Hotels) $500,013
Unsecured (200 Hotels)
Revolver
(Due 2022) 425,000
Term Loans and Senior Notes
(Due 2023 – 2030) 870,000
Unsecured Debt 1,295,000
Cash on hand (437,260)
Total Debt, net $1,357,753
Maturities, net of reserves 2020 2021
$0 $32,000
Estimated Net Cash Use Analysis
($ in thousands, except per key amount)
Monthly at 15% to 20% Occupancy
Operations(2) $5,000
Property taxes and insurance 5,500
G&A 1,500
Debt service 6,000
Estimated Monthly Cash Use(3) $18,000
Estimated Monthly Cash Use Per Key(3) $605
Other Commitments through 12/31/20 as of 5/15/20
Purchase of Hyatt Place and Hyatt House in Tempe, AZ(4) $63,300
Anticipated capital expenditures $10,000 - $15,000
(1) Subsequent to March 31, 2020, the Company closed on the purchase of the newly developed Hampton Inn & Suites and Home2 Suites in Cape Canaveral, FL, for a gross purchase
price of approximately $46.7 million. The Company entered into the contract to purchase the hotels in 2018. The Company utilized $25.0 million of its available cash and entered
into a one-year note payable with the developer secured by the hotels for $21.7 million to fund the purchase price of the hotels, which is not reflected in this debt summary.
(2) Estimated Net Cash Use prepared as a “base case” analysis of net cash use for hotel operations. Estimates include estimated cash received from revenue at anticipated average
lowest weekly occupancy levels experienced in April 2020 of 15% to 20% and estimated associated hotel operating and ground lease cash uses. This estimated cash use analysis is
not intended to be an estimate of actual expected monthly results for any particular period, and has not been updated to reflect actual results for any calendar months during the
second quarter 2020.
(3) Excludes capital expenditures.
(4) Contract entered into in 2018. There are many conditions to closing under the contract that have not yet been satisfied, including completion of construction, and there can be no
assurance that a closing on the hotels will occur. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the contract.
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TRADEMARK INFORMAT ION
The “Courtyard by Marriott®,” “Fairfield by Marriott
®,” “Fairfield Inn by Marriott
®,” “Fairfield Inn & Suites by Marriott
®,” “Marriott
®Hotels,” “Residence
Inn by Marriott®,” “SpringHill Suites by Marriott
®,” and “TownePlace Suites by Marriott
®” trademarks are the property of Marriott International, Inc. or
one of its affiliates. All references to “Marriott®” mean Marriott International, Inc. and all of its affiliates and subsidiaries, and their respective officers,
directors, agents, employees, accountants and attorneys. Marriott®
is not responsible for the content of this presentation, whether relating to hotel
information, operating information, financial information, Marriott®’s relationship with Apple Hospitality REIT, Inc., or otherwise. Marriott
®was not
involved in any way, whether as an “issuer” or “underwriter” or otherwise, in any Apple Hospitality REIT offering and received no proceeds from any
offering. Marriott®
has not expressed any approval or disapproval regarding this presentation, and the grant by Marriott®
of any franchise or other
rights to Apple Hospitality REIT shall not be construed as any expression of approval or disapproval. Marriott®
has not assumed and shall not have any
liability in connection with this presentation.
The “Embassy Suites by Hilton®,” “Hampton by Hilton
®,” “Hampton Inn by Hilton
®,” “Hampton Inn & Suites by Hilton
®,” “Hilton Garden Inn
®,” “Home2
Suites by Hilton®,” and “Homewood Suites by Hilton
®” trademarks are the property of Hilton Worldwide Holdings Inc. or one of its affiliates. All
references to “Hilton®” mean Hilton Worldwide Holdings Inc. and all of its affiliates and subsidiaries, and their respective officers, directors, agents,
employees, accountants and attorneys. Hilton®
is not responsible for the content of this presentation, whether relating to hotel information, operating
information, financial information, Hilton®’s relationship with Apple Hospitality REIT, Inc., or otherwise. Hilton
®was not involved in any way, whether as
an “issuer” or “underwriter” or otherwise, in any Apple Hospitality REIT offering and received no proceeds from any offering. Hilton®
has not expressed
any approval or disapproval regarding this presentation, and the grant by Hilton®
of any franchise or other rights to Apple Hospitality REIT shall not be
construed as any expression of approval or disapproval. Hilton®
has not assumed and shall not have any liability in connection with this presentation.
The “Hyatt Place®” and “Hyatt House
®” trademarks are the property of Hyatt Hotels Corporation or one of its affiliates. All references to “Hyatt
®” mean
Hyatt Hotels Corporation and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys.
Hyatt®
is not responsible for the content of this presentation, whether relating to hotel information, operating information, financial information, Hyatt®’s
relationship with Apple Hospitality REIT, Inc., or otherwise. Hyatt®
was not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in
any Apple Hospitality REIT offering and received no proceeds from any offering. Hyatt®
has not expressed any approval or disapproval regarding this
presentation, and the grant by Hyatt®
of any franchise or other rights to Apple Hospitality REIT shall not be construed as any expression of approval or
disapproval. Hyatt®
has not assumed and shall not have any liability in connection with this presentation.
SpringHill Suites, Burbank, CA
Apple Hospitality REIT, Inc.
814 East Main Street
Richmond, VA 23219
(804) 344-8121
www.applehospitalityreit.com
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